Correlation Between Cedar Realty and RadNet

Can any of the company-specific risk be diversified away by investing in both Cedar Realty and RadNet at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cedar Realty and RadNet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cedar Realty Trust and RadNet Inc, you can compare the effects of market volatilities on Cedar Realty and RadNet and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cedar Realty with a short position of RadNet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and RadNet.

Diversification Opportunities for Cedar Realty and RadNet

0.68

Correlation Coefficient

Cedar Realty  RadNet

Poor diversification

The 3 months correlation between Cedar and RadNet is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc and Cedar Realty is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cedar Realty Trust are associated (or correlated) with RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of Cedar Realty i.e., Cedar Realty and RadNet go up and down completely randomly.

Pair Corralation between Cedar Realty and RadNet

Assuming the 90 days trading horizon Cedar Realty is expected to generate 3.58 times less return on investment than RadNet. But when comparing it to its historical volatility, Cedar Realty Trust is 2.36 times less risky than RadNet. It trades about 0.18 of its potential returns per unit of risk. RadNet Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  6,504  in RadNet Inc on September 1, 2024 and sell it today you would earn a total of  1,672  from holding RadNet Inc or generate 25.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cedar Realty Trust  vs.  RadNet Inc

Cedar Realty Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Cedar Realty sustained solid returns over the last few months and may actually be approaching a breakup point.

RadNet Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, RadNet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cedar Realty and RadNet

The main advantage of trading using opposite Cedar Realty and RadNet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty position performs unexpectedly, RadNet can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in RadNet will offset losses from the drop in RadNet's long position.

The idea behind Cedar Realty Trust and RadNet Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.